Question: 1. Which financing option has the highest Financial Leverage (D/E ratio)? Explain why this option has the highest D/E ratio. 2. Which financing option has

1. Which financing option has the highest Financial Leverage (D/E ratio)?

1. Which financing option has the highest Financial Leverage (D/E ratio)? Explain why this option has the highest D/E ratio.

2. Which financing option has the highest level of risk to stockholders? Explain why this option has the highest level of risk to stockholders.

3. How might your decision to finance change as the cost of borrowing rises?

Proforma Balance Sheet at Year 6 End

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